Do not shoot the messenger. It is a fun cliche, is it not? However, it is more than a cliche. It is truth. Why do so many of us act like three year old children when given news we do not like? The mortgage industry is currently full of messengers and full of hard news to deliver. The news is usually fairly innocuous. But people do not take it that way. Below are some examples where the response I hear from people leaves me puzzled.
News from messenger: Your appraisal will cost $600 if you want it rushed instead of the normal $450. But it will help us get to settlement on time since you wrote a contract with a very fast three week closing date.
Receiver of news who shoots first and asks questions later: What?! That is ridiculous! That fee is way too high! That is out of this world. What an outrage! I am outraged. Can you hear the outrage in my voice?! It is not often that I get outraged! I won’t pay it!
My take: It is a small fee to achieve a big gain. It is an important step towards getting to settlement on time, on what is an expensive purchase. Pay the extra fee.
How to avoid the problem in the first place: Don’t agree to a short fuse settlement if you do not have to. Ask to go to settlement in 30 days, or 40 days. It is OK, the house will still be there waiting for you.
News from messenger: Your loan is approved, and the underwriter needs an updated bank statement. And needs you to provide documentation on a large $8,000 deposit so that we know where that money is from. Since Fannie Mae does not allow you to borrow money for your down payment, we need to document and paper trail all large deposits.
Receiver of news who shoots first and asks questions later: What?! That is ridiculous! Do you not want to make this loan?! This is absurd. I have taken out 412 mortgages in my life and not once has anyone asked me for this much paperwork! Are they trying to kill this loan? I am going to be homeless if I do not get this loan! How much more will they ask for?! When will this end?!
My take: It is just paperwork. These are inanimate objects that cannot hurt you. Provide the paperwork. These are Fannie Mae and Freddie Mac requirements and not our own. We really do not care about any of it ourselves. We would rather skip the paperwork, eat nachos, and drink beer all day, and get you to closing on your loan as fast as possible. If you want to complain to someone, complain to Fannie Mae, Freddie Mac, or your government representative. It is all of them who write the tough rules that we messengers have to deliver to you.
How to avoid the problem in the first place: Don’t ignore requests during the processing of the loan. And don’t cut corners. And pay careful attention to the checklists your lender gives you up front on the needed documents. You were probably asked to document all large deposits initially, and you chose to ignore it. Or you sent the bank statements in late, which is why they are asking for it late. Yelling will not make these requests go away.
News from messenger: We will have to delay settlement three days to finish the loan approval and preparation of closing documents.
Receiver of news who shoots first and asks questions later: What?! Scream. Yell. Scream, scream, yell. Unacceptable. I am going to speak to your manager, and the head of the banking regulator. And the President of these United States!
My take: You took five days to fill out your loan application after the contract was ratified because you were so busy. Then you took 6 days to return the signed loan disclosures instead of the 3 that we asked you to return them within, because you were so busy. We lost a week and a half of processing time due to your delays, you are lucky we are only going to be three days delayed.
How to avoid the problem in the first place: If you are going to buy a new home or refinance your existing loan, you need to make it a priority and plan to dedicate enough time to be part of the process. People tell us all the time they have to shop price because it is the “biggest and more important transaction we do.” And I am fine with that. But you also need to treat this as the biggest and more important transaction you do when it comes to the paperwork and your obligations to the entire process. Move quickly on each request each step of the way and you won’t be delayed.
I am all for being aggressive, trying to cut the best deal, reducing paperwork, or eliminating fees. I am the most aggressive, type A person in the industry. But I am also a realist. And the reality is that the mortgage industry has been taken over by the United States G-O-V-E-R-N-M-E-N-T. You know, the same folks that have brought you the same streamlined and efficient systems such as the IRS, Medicare, and Social Security. Try calling into one of those entities and see how much fun you have and how quickly things progress.
Our industry has become cumbersome and compliance heavy. And this has serious implications for the mortgage lenders if they make a mistake or miss something. If you really want to vent your anger, call your Congressperson. Tell them to get help to lenders alleviate the punishment of Fannie Mae’s buybacks and harsh underwriting rules. In the meantime, get your mortgage lender all they ask for, each time they ask for it, as fast as possible.
Mortgage guidelines can change at any time, so always talk to an experienced mortgage loan officer who will help you understand the current guidelines and how they might apply to you.